Berkshire operating profit falls short, book value rises

Fri May 6, 2016 5:53pm EDT
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By Jonathan Stempel

(Reuters) - Warren Buffett's Berkshire Hathaway Inc on Friday confirmed that its first-quarter profit rose 8 percent, while operating results fell short of analyst forecasts as falling oil prices and coal demand hurt its BNSF railroad unit.

The Omaha, Nebraska-based conglomerate, which has close to 90 operating units, also said its book value per share, measuring assets minus liabilities and Buffett's preferred gauge of growth, rose 1.2 percent from year end.

Net income rose to $5.59 billion, or $3,401 per Class A share, from $5.16 billion, or $3,143 per share, a year earlier.

Operating profit fell 12 percent to $3.74 billion, or $2,274 per Class A share, from $4.24 billion, or $2,583 per share.

Analysts on average had expected operating profit of about $2,759 per share, according to Thomson Reuters I/B/E/S, before Berkshire released preliminary results at its annual meeting in Omaha on April 30.

Results suffered as falling oil prices and lower demand for coal contributed to a 25 percent drop in profit at BNSF to $784 million, as overall volume fell 5.5 percent.

Freight revenue from industrial products such as petroleum fell 18 percent, and from coal tumbled 39 percent.

Railroad carloadings industrywide fell "significantly" in the first quarter, and "almost certainly will continue to be down the balance of the year," Buffett said at the meeting.   Continued...

Warren Buffett, chairman and CEO of Berkshire Hathaway, takes his seat to speak at the Fortune's Most Powerful Women's Summit in Washington October 13, 2015.  REUTERS/Kevin Lamarque/File Photo